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As prime ministers from both sides of the Tasman get ready to head to China for trade talks, news of Chinese regulatory changes has given local investors jitters and hit Australasian infant formula and health supplement stocks.

China's tax bureau introduced a tax on imported products purchased online this month. In another development, it has issued a "positive list" of types of goods allowed to enter the country via free trade zones.

Murray Goulburn, Australia's largest dairy company, confirmed yesterday that its Devondale consumer milk powder and long-life milk had been "temporarily removed" from some websites for immediate sale in China. Those two products are reportedly excluded from the positive list.

Infant formula is understood to be on the positive list, but that didn't stop stocks linked to the sector from taking a pummelling yesterday.

A2 Milk, which has been reporting stellar baby formula sales growth in China, was the worst performer on the NZX yesterday, with its shares falling 6.3 per cent to close $1.78. Shares in ASX-listed baby milk marketer Bellamy's Australia closed down 10.8 per cent at A$8.88, while units in Murray Goulburn's listed trust were down 8.2 per cent at A$2.01.

An A2 Milk spokesman said the company considered itself well-placed to meet the regulatory controls.

Jillian Laing, Fonterra's vice-president for Greater China Brands, said less than 1 per cent of the firm's products were sold through cross border e-commerce channels and the impact on its business was minimal. Units in the Fonterra Shareholders' Fund closed unchanged at $5.64 last night.

The Australian Financial Review reported that the latest regulatory changes form part of a pledge by Beijing, which entered a free trade agreement with Australia last year, to protect domestic retailers by imposing higher taxes on imports. It comes as a 1000-strong business delegation from Australia heads to China this week with Prime Minister Malcolm Turnbull.

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Prime Minister John Key will be in Beijing and other Chinese cities next week as part of a visit that will include discussions around upgrading New Zealand's FTA with China, which took effect in 2008. Asked about the potential free trade implications of the e-commerce changes, a spokeswoman for Trade Minister Todd McClay said last night: "We are seeking more advice on this."